Saving money as a teenager
Quick insights
- Setting clear savings goals and creating a plan can help teenagers start building healthy money habits.
- Using a savings account and digital tools may make it easier for teens to organize, track and automate savings.
- Consistently saving small amounts, even if your teen’s goals change, can support their financial confidence and future stability.
Learning how to save money can feel overwhelming for a teenager. As they’re just getting started with personal finance, they might be unsure where to begin, how much to save or what tools can help them stay organized.
The good news is that building money-saving habits now can help teenagers feel more prepared for the future—whether they're aiming for a specific purchase, planning for college or simply hoping to set aside funds for unexpected expenses.
By understanding the basics of saving and using digital banking tools, your teen can set the foundation for smart money management throughout their life.
How to help your teenager save money
The first step in saving money is to set a clear, attainable goal. Encourage your teen to think about what they want to accomplish—maybe it’s saving for a new phone, planning a trip or preparing for college expenses. Having a goal can help them stay motivated, monitor their progress and celebrate milestones along the way.
Once they know their goal, it’s time to make a savings plan. Together, you can look at how much money they typically receive, such as income from a part-time job, an allowance or gifts. Then, estimate how much they might be able to set aside regularly. Even saving a few dollars each week can add up over time and get them closer to their goal.
To help get them started, consider these practical steps for building a savings plan:
- Decide on a clear savings goal.
- Calculate regular income and expenses so they know what they can realistically save.
- Set a specific amount for them to save each week or month and help them stick to it.
Using a savings account
Opening a savings account can be a helpful way to support your teen’s savings plan. A savings account is a type of bank account designed specifically for setting money aside. Unlike a checking account, which is generally used for everyday spending, a savings account helps your teen separate savings from spending money, which may reduce impulse purchases and help them track their progress. Note that as minors typically can’t open accounts alone, you’ll usually need to be a joint owner or open a custodial account.
You can explain to your teen that a savings account earns interest, which is extra money the bank gives them for keeping their funds in the account. The total interest your teen earns in a year, including any compounding, is called the annual percentage yield (APY). A higher APY can help their savings grow a bit faster.
When choosing a savings account, you can look for features that support your teen’s savings goals and can help them avoid fees. For example, digital banking features like autosave can help your child move money from checking to a savings account on a regular schedule. Automating savings can make the process part of a routine, and teens may find it easier to stay consistent this way.
Additionally, some checking accounts for kids may allow them to set funds aside for savings goals.
Budgeting for savings
Budgeting can be another important part of learning how to save money as a teenager. A budget is a plan for how to use money each month. One approach your teen may find helpful is the 50/30/20 budget rule. This method allocates income into three buckets: needs, wants and goals. Each bucket is allocated a different percentage of your teen’s income. This method can help ensure your teen is not spending more than they have and that they’re consistently putting money toward their goals.
Many mobile banking apps feature budgeting tools or spending trackers. These may help you monitor where your teen’s money is going, identify categories where they might cut back and find extra amounts to save.
Exploring different account types
As your teen’s savings grow, you may want to encourage them to consider other types of savings accounts. For instance, a certificate of deposit (CD) requires leaving funds in an account for a set period. In exchange, the bank might offer a higher interest rate than a regular savings account, though the rate depends on term and market conditions.
However, your teen generally won’t be able to access the money before the term ends without a penalty, so CDs are best for longer-term goals. Additionally, as teenagers cannot purchase CDs on their own, you will need to act as a custodian.
Adapting your teen’s goals as they grow
It’s normal for savings goals to change over time. Your teen might start by saving for a smaller purchase, then shift their focus to bigger milestones as they gain more confidence in managing their money. Here are some common goals teens might save for:
- Building an emergency fund for unexpected expenses like car repairs or school activities
- Saving for college supplies or future education costs
- Planning for special purchases such as electronics, clothes or fun with friends
It can be helpful to start with a small amount. Over time, these habits may help teens become more confident in managing their money and making choices that support their goals.
Using digital banking tools
Digital banking tools can make saving more streamlined. Banks may offer mobile apps with features such as budgeting resources, spending trackers and reminders, which may help your teen monitor their progress and stay on track.
Consistency over perfection
Remind your teen that saving money isn’t about being perfect—it’s about taking small, consistent steps toward their goals. Your teen’s plans and priorities may shift as they grow, and that’s completely normal. The habits they build now can set them up for financial stability in the future and help them feel prepared for whatever comes next.
In summary
Learning to save money as a teenager is a skill teens can develop over time. By setting clear savings goals, creating a plan, exploring different types of accounts and using digital banking tools, teens can build habits that help them reach both short- and long-term goals. Whether they’re saving for a specific purchase, preparing for emergencies or planning for college, starting now can help them gain confidence in managing their money.
